How to Stack the First Home Guarantee with HBCS in the ACT Without Triggering an Audit

ACT first home buyers can combine the federal First Home Guarantee (5% deposit, no LMI) with the territory's Home Buyer Concession Scheme (zero stamp duty up to $1,020,000) in the same transaction. Done correctly, this combination eliminates both Lenders Mortgage Insurance and conveyance duty — saving a buyer purchasing an $850,000 property over $50,000 in upfront friction costs compared to entering the market without either scheme.

Done incorrectly, it triggers one of the most common HBCS audit results in Canberra: buyers who used the First Home Super Saver Scheme (FHSS) to build their deposit inadvertently pushed their gross income above the HBCS threshold, then claimed both schemes, and received a Notice of Reassessment two years later demanding the full $35,238 in conveyance duty plus 12.42% compounding interest backdated to settlement.

This page covers how each scheme works, how they interact, and the exact income calculation you need to run before claiming both.

How the Three Schemes Work Individually

The First Home Guarantee (formerly First Home Loan Deposit Scheme)

Administered by Housing Australia, the First Home Guarantee allows eligible buyers to purchase a home with a deposit as low as 5% without paying Lenders Mortgage Insurance. The government guarantees the remaining 15% of the standard 20% deposit to the participating lender, meaning the lender is protected and waives the LMI requirement.

Changes effective 1 October 2025: The scheme removed both income caps (previously $125,000 for singles, $200,000 for couples) and property price caps for the standard stream. The annual cap on total scheme places was also removed. This means any Australian citizen or permanent resident aged 18 or older who has not owned residential property in the last 10 years can apply, subject only to the lender's own serviceability assessment.

The guarantee does not affect your income calculation for HBCS purposes — it is a loan guarantee, not income.

The Home Buyer Concession Scheme (HBCS)

Administered by the ACT Revenue Office, the HBCS eliminates conveyance duty for eligible first home buyers purchasing properties under $1,020,000 (2025–26 threshold). For properties between $1,020,000 and $1,455,000, a concessional rate applies.

The income threshold: Eligibility is gated on gross household income for the financial year prior to the transaction date. The baseline threshold is $250,000 for a couple or single buyer with no dependent children, scaling to $273,000 for five or more children. This includes all gross assessable income — base salary, overtime, bonuses, investment income, and FHSS withdrawals.

The First Home Super Saver Scheme (FHSS)

Administered by the ATO, the FHSS allows buyers to make voluntary concessional or non-concessional contributions to superannuation and later withdraw them (up to $50,000 total) to fund a first home deposit. Withdrawals are taxed at marginal rates minus a 30% offset.

The income trap: When you withdraw from FHSS, the ATO counts the gross withdrawal amount — before the tax offset — as part of your taxable income for the financial year of withdrawal. If you withdraw $25,000 from FHSS in June 2025 and your combined household income from salaries was $232,000 for 2024–25, your ATO-assessed gross income is $257,000 — $7,000 above the HBCS threshold.

How the Interaction Creates Audit Risk

The FHSS and the First Home Guarantee are both federal schemes managed by the ATO and Housing Australia respectively. The HBCS is a territory scheme managed by the ACT Revenue Office. These bodies do not coordinate applications in real time — but they do share data retrospectively.

The sequence that creates audit risk:

1. Buyer uses FHSS to withdraw $30,000 in June 2025, building their deposit
2. Buyer applies for the First Home Guarantee in August 2025, approved based on income and creditworthiness
3. Buyer settles in September 2025, claiming HBCS based on their 2024–25 gross income — calculated as $228,000 including salary only, well under the $250,000 threshold
4. ATO processes the 2024–25 tax return in November 2025 — the FHSS withdrawal gross amount ($30,000) is added to the income calculation, bringing the ATO-assessed household income to $258,000
5. ACTRO's data-matching system, running 12–18 months post-settlement, queries ATO records and identifies the income discrepancy
6. Notice of Reassessment issued: full conveyance duty plus compounding interest at 12.42% backdated to settlement plus penalty

The buyer did not lie on their HBCS declaration. They calculated their income using their salary figure, which was accurate. What they did not know was that the FHSS withdrawal, drawn before settlement but after the start of the financial year, inflated their ATO gross income figure.

The Correct Income Calculation

Before claiming HBCS alongside any other scheme, calculate your gross household income as the ATO will report it for the prior financial year — not as you experience your salary.

Include in gross household income:

• Gross salary of all applicants (before tax, before salary sacrifice)
• Gross salary of any domestic partner sharing the home (even if not on the title or mortgage)
• Overtime, shift allowances, and bonuses received in the prior financial year
• FHSS withdrawal gross amounts (the amount before the 30% tax offset is applied)
• Rental income from any investment properties
• Business income, freelance income, and contractor payments
• Dividends and interest income (if material)

Exclude from gross household income:

• Employer superannuation contributions (these are not assessable income)
• Salary sacrifice amounts (your gross salary is your reported salary before sacrifice, but the sacrifice itself is not included a second time)
• The tax offset component of an FHSS withdrawal (only the gross withdrawal counts)
• Capital gains on shares or property not realized in the prior financial year

The calculation step-by-step:

1. Take each applicant's gross salary for the financial year prior to settlement (not the current year — the prior year)
2. Add any domestic partner's income if you share a genuine domestic relationship
3. Add gross FHSS withdrawal amounts drawn in that prior financial year
4. Add any other assessable income items
5. Compare the total to the HBCS threshold applicable to your number of dependent children
6. If the total exceeds the threshold, you are not eligible for HBCS in that financial year

If you are settling in July or August immediately after the financial year rollover, the relevant prior year income is the year just ended — which you may not have formally lodged yet. Estimate it as carefully as possible and verify before settlement.

Timing Strategies to Maintain Eligibility

Strategy 1: Withdraw FHSS After Settlement

If your combined income including FHSS withdrawal would push you over the HBCS threshold, consider whether you can settle in a financial year where the FHSS withdrawal occurred in a different year. The FHSS withdrawal is counted as income in the year you receive it — not the year you made the contributions. If you made contributions in 2023–24 and 2024–25, but withdraw in July 2025 (the start of 2025–26), the withdrawal appears in your 2025–26 income — which is the current year, not the prior year used for HBCS assessment.

If you settle in, say, October 2025, the HBCS assessment uses 2024–25 income — which does not include the July 2025 FHSS withdrawal. This is a legitimate timing strategy, not a circumvention.

Caveat: You cannot draw down your FHSS withdrawal until after you have a signed contract for a property. The timing only works if your settlement date falls in a financial year after the FHSS withdrawal year.

Strategy 2: Use the First Home Guarantee Without FHSS

If your deposit can be funded from savings, a gifted deposit from family, or another source — without triggering a taxable FHSS withdrawal — you may be able to maintain HBCS eligibility without the income inflation. The First Home Guarantee does not affect your HBCS income calculation at all.

Strategy 3: Assess Whether FHSS or HBCS Is Worth More

For some buyers near the threshold, the FHSS withdrawal causes a higher total saving than its cost in lost HBCS eligibility — and for others, the reverse. Run both calculations:

• FHSS path: Add FHSS withdrawal to income, exceed HBCS threshold, pay full conveyance duty. Net saving from FHSS deposit (tax saved on contributions) versus cost (conveyance duty now payable).
• HBCS path: Do not use FHSS, keep income under threshold, save $35,238 in conveyance duty. Fund deposit from salary savings alone — which may mean delaying the purchase.

For most buyers purchasing at $700K–$1M, the HBCS saving of up to $35,238 substantially outweighs the marginal tax saving from FHSS contributions (typically $3,000–$7,000 on a $15,000 annual contribution). But this depends on your salary, your partner's income, and the size of your FHSS balance.

Stacking Worked Example

Scenario: Dual-income couple. Partner A earns $118,000. Partner B earns $109,000. Both have $18,000 each in FHSS balances from three years of voluntary contributions. Purchasing an $820,000 townhouse in Gungahlin.

Option A — Use FHSS to withdraw both balances ($36,000 total withdrawal):

• ATO gross income for HBCS year: $118,000 + $109,000 + $36,000 = $263,000
• HBCS threshold: $250,000 (no children)
• Result: Ineligible for HBCS. Conveyance duty payable on $820,000 under standard owner-occupier rates: approximately $23,200.
• First Home Guarantee: Applicable (removes LMI requirement). 5% deposit = $41,000.
• Net friction cost: ~$41,000 deposit + $23,200 duty + ~$2,600 other costs = ~$66,800

Option B — Do not use FHSS, fund deposit from savings alone:

• ATO gross income for HBCS year: $118,000 + $109,000 = $227,000
• HBCS threshold: $250,000 (no children)
• Result: Eligible for HBCS. Conveyance duty: $0.
• First Home Guarantee: Applicable (removes LMI). 5% deposit = $41,000.
• Net friction cost: ~$41,000 deposit + $0 duty + ~$2,600 other costs = ~$43,600

FHSS saving foregone in Option B: Approximately $5,000–$7,000 in combined tax savings on the contributions.

Net result: Option B saves approximately $23,200 in stamp duty at the cost of approximately $6,000 in foregone FHSS tax savings — a net advantage of approximately $17,000 in favour of not using FHSS in this scenario.

The FHSS balances do not disappear — they remain in superannuation and can be used to supplement a second property purchase in the future if eligibility conditions are met.

Tradeoffs

The case for using both FHSS and HBCS: If your combined income (including FHSS withdrawals) remains comfortably under the threshold, there is no conflict. Use both. The combined saving — no LMI, no stamp duty, plus the FHSS deposit tax benefit — represents the most capital-efficient path to ACT property ownership available under current law.

The case for choosing one over the other: When your income sits within $30,000–$40,000 of the HBCS threshold, the FHSS withdrawal may push you over. Model both paths explicitly before withdrawing from super. The stamp duty saving at ACT property values almost always outweighs the FHSS tax benefit.

The honest limitation: These calculations depend on your specific income composition, partner income, property price, and timing. Run the numbers with your tax accountant before claiming both schemes.

Frequently Asked Questions

Does the First Home Guarantee affect my HBCS eligibility?

No. The First Home Guarantee is a loan guarantee provided by the government to your lender — it is not income to you. It does not appear in your gross household income calculation and does not affect your HBCS assessment. The two schemes are fully compatible.

Can I use FHSS withdrawals from a prior year to avoid the income threshold issue?

No. The FHSS withdrawal is counted as income in the financial year you receive the withdrawal — not the year you made the contributions. If you withdraw in 2024–25, it counts in 2024–25 income regardless of when you contributed.

What counts as a "domestic partner" for HBCS income purposes?

Any person with whom you share a genuine domestic relationship — married, registered relationship, or de facto. The ACT Revenue Office applies the definition broadly. If you live with a partner on a genuine domestic basis, their income must be included in your household income total even if they are not on the title, mortgage, or any other purchase documents.

If I accidentally breach the HBCS income threshold due to FHSS, what happens?

ACTRO's data-matching system will flag the discrepancy when they cross-reference your self-assessment against ATO records. A Notice of Reassessment will require you to pay the full conveyance duty plus 12.42% compounding interest from the date of settlement plus a penalty of up to 25%. In 2023–24, reassessments increased 191% — this is an active enforcement area.

Where can I get the full stacking guide and income calculation framework?

The Australian Capital Territory First Home Buyer Guide covers the federal scheme stacking strategy in full — including the FHSS interaction trap, the exact tax treatment of FHSS withdrawals, the First Home Guarantee and Help to Buy scheme comparisons, worked cash-to-close scenarios, and the HBCS Audit Defence Playbook for protecting your claim through settlement and beyond.

See more Australian Capital Territory guides →